Market Analysis

ECB policymaker Pierre Wunsch emphasized in an interview that while the recent interest rate cut was straightforward, future cuts should only follow once inflation clearly approaches the 2% target. 

He noted that despite recent data showing persistent wage and service price growth, a second rate cut could still be warranted according to current forecasts, though not urgently so. Wunsch suggested waiting for the ECB's next projections in September for more clarity, highlighting the importance of confirming a sustained path towards lower inflation rates before further actions are considered. 

Market expectations suggest potential cuts totaling around 40 basis points by year-end, amid ongoing economic recovery and political uncertainties across Europe, including fiscal challenges in several countries. Wunsch dismissed speculation about immediate emergency measures, stating that any ECB intervention would hinge on market conditions meeting specific criteria of being unwarranted and disorderly.

Paraphrasing text from "Reuters" all rights reserved by the original author.